Store as Fulfillment Center: Omnichannel and the Future of Retail

by Anitha Rajagopalan   |   November 4, 2015 5:30 am   |   0 Comments

Anitha Rajagopalan, retail and omnichannel consultant , Happiest Minds

Omnichannel has come of age for brick-and-mortar retailers.

Traditional retailers have been on a slow yet steady adoption of digital technologies over the last two decades. First arrived e-commerce, which retailers took on as another channel for customer acquisition and sales. Coupled with this emerged online-only players opening up new avenues of fulfillment. Then came smartphones, setting a new paradigm of customer experiences.

Today, with the faster evolution of technology and ever-increasing consumerization, there is a demand for ultimate flexibility and innovation. Customers expect to be recognized and pampered, and they switch loyalty for the smallest of added perceived value – be it monetary based, convenience based, or experience based.

Brick-and-mortar retailers with an established national and/or international store network are specifically suited to meet the customers of today where they are – online, on mobile, in a physical store, or even in a subway station.  These phy-digital retailers can and must strive for true omnichannel – seamless, connected, and personalized experiences irrespective of how and where their customers shop.

The Potential of a Store

Despite the increasing adoption of digital shopping, it remains a fact that, for bricks-and-clicks retailers, over 90 percent of revenues are from their physical stores and the store, therefore, continues to be nerve center of operations. It is important to realize the true potential of the huge store network for such retailers.

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Stores can transform to be experience centers for omnichannel customers. Here are a few solutions that can bring transformational experiences in-store:

• Experiential kiosks and digital displays

• Digital signage

• In-store IoT/ beacon-based personalized experiences

• Customer engagement driven by data insights

Stores can be mini-fulfilment hubs, offering ultimate flexibility when it comes to delivery choices and saving a potentially lost sale. Examples of such initiatives include the following:

• Order online to pick up in store or at curb side, fulfilled from store or warehouse

• Order in-store for home delivery, from a warehouse, same store, or another store

• Order in-store for pick up from store, from same store or another store

When armed with right tools and technologies, store associates can be brand ambassadors, driving customer loyalty and improving customer retention. For example, when a store associate is asked a question about a salmon pink shirt that was found online but is not in stock in store, the store associate should be incentivized and have the tools to check inventories of nearby stores or the distribution center. Further, the associate should be empowered to take the order for shipping this product to customer’s home at no extra charge the next day.

It’s a no-brainer that omnichannel retailers must invest in technologies that deliver the data to drive store-transformation initiatives.

Implications for Brick-and-Mortar Retailers

For a complete omnichannel transformation to be successful over next two to three years, the foundation has to be strong. It starts with a data-driven, single view of the customer, orders, inventory, products, etc. and a scalable architecture to support dynamic changes in business.

• To enable an endless aisle of products not limited to a store’s physical space, a global product catalog should be available across channels, including your extended supply network and drop-ship vendors.

• To enable stores to be fulfilment hubs, a real-time and reliable view of inventory data should be available across the entire supply network.

• And for personalization to click, a 360-degree view of customers’ online orders, store transactions, social engagement, lifetime value, loyalty history including open orders, queries, and complaints is a must.

Orchestrate transformational customer journeys. Decoding retail customer journeys is the starting point to digital transformation. In the era of design thinking and customer experience, a new paradigm of solution design is evolving. Yes, there are beacons, there is big data, there is fast data, there are mobile technologies and cloud applications that promise Nirvana. However, to get transformational business outcomes, there is a need for careful curation of experiences.

Bricks-and-clicks retailers must orchestrate an end-to-end experience that is beyond a pointed technology solution to solve a particular problem like knowing what the customer did on the website or what she purchased in a store. It is about bringing all the insights and business states about products, customers, and even assets like dressing rooms to curate a new digital journey for the customer in-store.

Empower store associates. Retailers must realize the importance of their associates as omnichannel evangelists who can make or break seamless experiences for the customer. Initiatives to incentivize cross-channel “save the sale” behavior is one key paradigm shift that retailers must consciously undergo.

The store associate must be equipped with data on products available across different distribution channels and, to be credible brand advocates, also must be as knowledgeable as her customer. She needs the right technology to have access to meaningful insights on her customer in order to offer a personalized experience. Tools and technologies that can provide data that deliver in-the-moment, 360-degree views on customers, enterprise-level inventory data, mobile point of sale, and in-built intelligence to provide the right recommendations (product recommendations, substitutes, alternate fulfillment options, dynamic offers) are critical for associate empowerment.

The benefits of executing well on all the above initiatives are increased footfalls, increased conversions with a multiplier effect across channels and, most importantly, increased customer loyalty and retention.